Senate panel to study taxes of Big Oil

WASHINGTON — A Senate committee Wednesday announced an investigation into taxes paid by major oil companies and asked the Internal Revenue Service for the companies' tax returns.

The Senate Finance Committee promised "a comprehensive review of the federal taxes paid" by the 15 largest oil and gas companies. The committee said it wanted to inspect their tax returns for the past five years.

It's highly unusual for the Senate committee to seek corporate tax records. The last time it was done was when the panel asked the IRS for the tax records of Enron.

The committee announcement came as Congress showed increasing concern amid political fallout over high gasoline prices and oil industry profits. Lawmakers began moving on various fronts to eliminate loopholes and some tax provisions that save oil companies billions of dollars.

A House-Senate conference, negotiating a large tax bill, is considering a provision that would change accounting rules for oil inventories and require the five biggest oil companies to pay $4.3 billion more in taxes.

The measure passed the Senate but was viewed as essentially dead this week because of opposition from House GOP lawmakers. The White House opposed the idea, too, when it surfaced in November.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee said Wednesday that high fuel prices have revived the inventory tax plan and it "is still being negotiated."

Additionally, there is broad bipartisan support for scuttling other breaks given to oil companies only eight months ago when President Bush signed an energy bill.

Bush on Wednesday urged Congress to remove those tax provisions, worth $2 billion over 10 years. He said people should not pay for such subsidies when the industry is wallowing in cash.

Sen. John Kerry, D-Mass., said he intended to offer legislation repealing the tax breaks. They included subsidies for exploration in deep waters of the Gulf of Mexico and in geologically or politically difficult regions of the world, as well as royalty relief for certain oil and gas exploration.

Executives of the major oil companies said at a recent hearing they do not need those tax breaks. But Red Cavaney, president of the American Petroleum Institute, said Wednesday at a news conference that the proposed changes on oil inventory accounting are "equivalent to a windfall profits tax" for the five largest U.S. oil companies.

The Senate-passed plan would change accounting rules for oil kept in inventory. The changes would raise $4.3 billion in additional taxes from the companies over five years, according to a congressional analysis.